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Strategic direction | Strategy
Strategy
Vattenfall’s overarching strategy is focused on strengthening the company’s customer focus and on transforming to a
more sustainable energy portfolio. Parallel with this, Vattenfall must be able to generate a market rate of return to the
owner and be a long-term financially stable company.
Vattenfall – like other major European power utilities – continues to
face a number of major challenges and must adapt to the changed
market conditions. Its large-scale electricity generation must be
adapted to a market situation characterised by weak demand and
considerably lower electricity prices than previously. The production
Vattenfall’s overarching strategy for the years ahead is focused on the
following three strategic focus areas:
Strong customer focus and new customer-centric business models
A more sustainable energy portfolio
Increased business focus in all operations
portfolio must be restructured towards more renewable forms of
energy and greater business focus along the entire value chain. New
financing solutions must be pursued to enable investments in renewable energy, mainly wind power. Rising demands by customers and
society for new, sustainable products and services must be met.
New organisation effective 1 April 2015
On 1 April 2015 the regional structure that was adopted on 1 January
Heat – All heating operations including all thermal operations,
2014 will be replaced by six cross-border Business Areas in order to
be able to better support the Group’s new overall strategy.
except for the lignite operations, which will form a separate unit,
Mining & Generation
For further information about the company structure, see the
corporate governance report on page 57.
Wind – All wind power operations
Customers & Solutions – Sales to end customers
Generation – All hydro and nuclear power operations
Markets – Corresponds to the current Business Division Asset
Optimisation and Trading
Distribution1 – Distribution operations in Sweden and Germany
1) The electricity distribution operations are regulated by the Swedish Electricity Act and the German Energy Industry Act (Energiewirtschaftsgesetz),
and are unbundled from Vattenfall’s other operations.
18 Vattenfall Annual and sustainability report 2014
Strategic direction | Strategy
Successful consolidation
respective regions. The division was also designed to enable a broad-
Following a number of years of strong growth resulting from a series
er ownership structure for operations outside of the Nordic countries
over time.
During the autumn of 2014 Vattenfall’s portfolio strategy was
of acquisitions, a shift in strategy was made in 2010 towards consolidating the company and strengthening its financial position. While
this strategy has been successful, it has fallen short of fully compensating for the increasingly challenging market conditions. Annual
costs have been cut by more than SEK 13.7 billion, or 26% compared
reviewed, and the decision was made to study the possibility of
selling the lignite operations in Germany. On the other hand, the
other operations in the Continental/UK region – such as combined
with the cost base in 2010.
The investment plan has been scaled back from SEK 201 billion for
heat and power production, district heating, electricity distribution
and wind power – will be retained and will continue to make up key
the period 2010–2014 to SEK 105 billion for the period 2014–2018,
parts of Vattenfall’s core business. To facilitate the shift towards more
in order to be more closely aligned with the company’s anticipated
cash flow. Effective from 2015, Vattenfall has limited its investment
renewable and sustainable energy production, effective 1 April 2015
Vattenfall will be organised in six Business Areas. The aim is to in-
plan to cover only the next two years. Debt has been reduced through
crease the Group’s business and performance focus, and to capitalise
the divestment of a number of operations, such as the heat and
electricity network businesses in Poland and Finland, the electricity
on cross-border synergies. This new, business-driven cross-border
organisation signifies that Vattenfall will continue to be a European
distribution operation in Hamburg, the operations in Belgium, and
several other operations that are considered to be non-core business-
energy company under Swedish ownership.
es. Availability of Vattenfall’s nuclear power generation has improved,
from 74% in 2010 to 82.8% in 2014. Since 2010, CO2 emissions have
decreased from 94 million tonnes to 82.3 million tonnes in 2014.
Vattenfall’s strategy starting in 2015
Vattenfall’s overarching strategy summarises how Vattenfall plans to
meet the challenges and take advantage of business opportunities
in the new energy landscape. The strategy covers each of the three
New organisation with six Business Areas
On 1 January 2014 Vattenfall was reorganised into two geographical
dimensions Sustainable consumption, Sustainable production and
Sustainable financial performance. Within each of these dimensions
regions, Nordic and Continental/UK. This was done to be able to
Vattenfall is working with a number of strategic objectives.
better deal with the various, national market conditions within the
Sustainable consumption
Sustainable production
Sustainable financial
performance
STRATEGIC FOCUS AREAS
Strong customer focus and new
customer-centric business models
A more sustainable energy portfolio
Increased business focus in all
operations
STRATEGIC OBJECTIVES
Vattenfall will offer a wide array of
energy solutions to end customers,
with high delivery reliability and a
superior standard of service.
Vattenfall will conduct safe and
efficient large-scale conventional
energy production at the same time
that the Group will be a leader in wind
power.
In the area of sustainable financial
performance, Vattenfall will strive to
continuously improve its operations
and make them more sustainable,
such as through a strong business
focus and efficient use of resources.
Vattenfall Annual and sustainability report 2014 19